South Africa’s trade unions

Could the deal be contagious?

THE owners of Lonmin, a big platinum company, must be heaving heavy sighs of relief. On September 18th workers at its mine at Marikana in South Africa signed a deal that ended a six-week wildcat strike that has left 45 people dead. Miners will get a pay bump of between 11% and 22%, along with a one-off bonus of 2,000 rand ($240). Rock-drill operators, who have been at the centre of the industrial action, will get just over 11,000 rand a month. Not quite the 12,500 they were demanding, but, it appears, close enough.

The recent strikes at platinum and gold mines have cost South Africa 4.5 billion rand in lost production, said Jacob Zuma, the country’s president and leader of the ruling African National Congress (ANC). Along with the deal ending the strike, Lonmin said it would close a shaft at Marikana and lay off 1,200 contract workers.

Fears of contagion persist. Strikes are not uncommon in South Africa but the violence at Marikana has rattled many in the industry. Looking at Lonmin, other miners may conclude that militancy is the best way to squeeze more money out of their employers. In recent weeks workers at mines owned by Anglo-American, Gold Fields and Gold One have walked out. A day after the Lonmin deal was signed police fired rubber bullets and tear-gas at protesters near an Anglo-American mine where operations had been temporarily suspended because of demonstrations.

The strike at Marikana may be over but it has left South Africa’s leaders, especially its trade unions, looking feeble. A committee appointed by miners, along with the South African Council of Churches and other civic leaders, brokered the deal at Lonmin, not the government or the unions. And the strike there was not only about pay; it was also a protest against the inadequacies of the miners’ official union.

Across South Africa, unemployment remains stubbornly high. At least a quarter of South Africans are jobless, probably more. A growing number work in the informal sector, where the unions wield little clout. As the Congress of South African Trade Unions meets this week for its national conference, the feeling is growing that it and the ANC are more concerned with internal squabbles and party politics than addressing South Africa’s many pressing problems.

Foreign miners like Lonmin sitting at their fat opaque offices in London etc. should be less extractive and use the values of Democracy, Good governance, Transparency, Human rights onto themselves. It is no point preaching to the African workers, Trade union, Regime etc. the values and doing the opposite in practice.

Readers who have never lived or worked in South Africa (visiting as a tourist doesn't count) will not appreciate the labour challenges industry faces here. Firstly both the trade union federation COSATU and the ANC govt. view industry as the enemy of labour. This has led to labour legislation that is so draconian that businesses do their best to avoid hiring of labour. This is the reverse of what should happen in a country with an official unemployment rate of 25% - most of us believe that 45% is closer to the truth. To make matters worse COSATU unions have for the best part of the last decade demanded (and most often got) wage increases well above inflation - e.g. demanding 15% increase when inflation is 5%. This has caused labour costs to rocket, while the protracted strikes (if you are asking 3 times inflation of course it's going to be protracted) have cost industry dearly in lost production.
Workers in the platinum sector are among the best paid in SA - top quartile for their skills level, and Lonmin was right there. So the wage level wasn't the cause of this disaster - IMHO it had 2 main causes;
1. Many of these workers come from the Eastern Cape, more than 1000Kms from Marikana - they are effectively migrant labour. Most support extended families back home, and to send back as much money as possible they live in shanty towns near the mines - this is analagous to Asian workers working in squalid conditions abroad so as to be able to send money to their families back home. As a result many of these miners subsist on the bare minimum and then complain that they are being underpaid. This is the choice of the workers, not the employer.
2. NUM, the trade union which concluded a 2 year wage deal with Lonmin was un-responsive when a group of about 3000 workers who were in dire straits asked for help. They had good reasons for not being able to help - NUM had worked hard to get the employer to sign a 2 year wage deal. Now you can't just unilaterlly decide to scrap an agreed wage deal 1/2 way through because 12% of the workers can't manage their finances. So the miners went to a break-away union called AMCU - AMCU is challenging NUM for members so of course they said they could help - the wildcat strike resulted. (AMCU is excluded from wage negotiations because NUM has over 50% membership so they freeze out the smaller unions. This is not Lonmin's decision - COSATU put this rule in place).
So to cut a very long story short, the breakaway AMCU used COSATU's tactics of a violent strike to force Lonmin to roll over and award a crazy increase while a negotiated 2 wage agreement is in force. This is madness and will cause massive problems in the industry - in fact it has already started. And just for info., the half-yearly profit that Lonmin made (a measly $14 million) has been completely wiped out by the R192 million payout made to the murderous rabble plus 21000 other workers. 1200 jobs have been lost as a direct result of this strike, plus a Lonmin development has been halted. Lonmin is now runing at a loss and the whole PGM industry in SA faces a crisis.
IMHO Lonmin are guilty of dereliction of duty in how they handled the strike but trust me they are not guilty of underpaying or abusing their workers.
Chris King
Empangeni, South Africa

Chris, may I ask, do you make more or less than the mine workers?
I currently make more than the mine workers, but in the past I have survived on less than them.
Hearing that they have gotten a pay rise, even if they already were in the top 25% of earners, makes me happy for them and their families. They will be seeing a significant raise in standard of living, which I celebrate.
I'm sure the mine owners will not suffer a drop in their standard of living, nor will customers purchasing platinum or gold.

I currently make more than the mine workers, but in the past I have survived on less than them.

Hearing that they have gotten a pay rise, even if they already were in the top 25% of earners, makes me happy for them and their families. They will be seeing a significant raise in standard of living, which I celebrate.

I'm sure the mine owners will not suffer a drop in their standard of living, now will customers purchasing Platinum or Gold.

I am surprised at the cynicism of the writer of this article. He/she writes that the strike could serve as a model for other miners to squeeze more money out of their employers. He/she could have written that other miners would be incentivised to claim an income compatible with adequate, allowing dignity living standards. If he/she believed that miners are subject to horrific working conditions and not slaves. The propaganda to advance neo-liberalism is relentless.

maybe the reporters who covered the story should have been looking at the links between the mine labour brokers and politicians and their families. A lot of the money paid by the mining companies for wages is not reaching the workers.

You're preaching to the choir!
But exactly my plea: as long as the issues get seen and addressed within the narrow confines of the interests of small goups (eg. specific unions), the national issues will not be solved. Yes, productivity improvement does short term lead to reduced head count, but to increased investment and thus longer term more jobs (I understand that you understand). And if the relevant politicians do not understand, cannot or will not address the overarching issues, things are unlikely to improve.
Again, long term increased and sustainable living standards can only work through improved productivity. Anyone who wishes to do the math (at a very basic level) will understand.

Expect an increase in productivity for more money? - no-oh!. An improvement in productivity implies a reduction in headcount and that is the exact opposite of what the trade unions here want. I can guarantee you that productivity wasn't even remotely in the vicinity of the agenda of the meetings held to get the Lonmin workers back to work. The fact is that 3000 (out of 24000) workers held the company hostage and the company paid the ransom. Now they must live with the consequences.
Chris King
Empangeni, South Africa

Well that is a difficult question to answer - there are several different grades of mineworkers, from GWs (general workers) through rock-drillers right up to shift bosses so it depends what grade you compare with. I am self-employed (I own a small IT business)and I gross R12600 pm and clear R11160 pm after tax, so I am pretty much on a par with the rock-drillers on their new scale. Seeing that they are semi-skilled workers one level above GWs and I am a person with a 4 year degree this is a bit lop-sided, but I guess I don't have to work underground. I also don't get employer funded allowances that the rock-drillers do, like medical aid and pension - that makes it even more lopsided IMHO.
What you should realise is that 45 people have lost their lives in this tragedy, 11 at the hands of the strikers. In addition a further 1200 workers have lost their jobs as a direct result of this strike action and settlement, (a Lonmin shaft has been closed) and a further 3000 jobs that were in the pipeline have been lost as that greenfields project has now been canned by Lonmin. Maybe you should consider the fact that these 4200 lost employees enjoy NO income while the strikers enjoy their 22% increase.
Finally, it seems certain that Lonmin has moved from a small profit to a loss-making situation as a result of this fiasco. Investors don't much like loss-making companies - they tend to pull their money out and as a result the place is shut down. When this happens consider what these lucky miners will do when their magical 22% increase morphs into retrenchment. This 'victory' is no cause for celebration - they are busy wringing the neck of the goose that lays their salaries.
In closing, maybe read what the mining trade union NUM says;http://www.iol.co.za/the-star/expect-a-bloodbath-of-job-losses-1.1387956...

The article does not mention that the 45 dead were workers, not employers. Nor does it say a word about the dismal conditions of the workers. The author is clearly on the side of the wealthy employers not the impoverished workers. This article should be used to teach how to write ideologically biased articles that appear as balanced reporting. This newspaper excels in this kind of suave neo-liberal consistency.

Presumably the new wage deal made it uneconomical to keep the shaft that is now being closed, at the loss of 1200 jobs, open. That, unfortunately, is always the balance that needs to be struck in situations of this nature: higher wages without parallel increases in productivity almost inevitably lead to job losses.
I have seen nothing in the article or other media pertaining to commitments or even the effort at productivity improvements. Thus the undoubted contagion already becoming apparent may well lead to some wage increases, but again at the loss of jobs, short of linked productivity gains.
Alternately, price increases! Some laws of economics are like water filled balloons, squeezing at one point will cause bulging elsewhere, until breaking point!

Well that may be because it is a disease. Workers in the platinum belt we being paid in the top quartile for their type of work in South Africa. Many of us believe that unemployment is closer to 45% than 25% 9the official figure) and I can assure you that millions of South Africans would do anything for jobs that pay this well. The rank and file semi-skilled worker here has no concept of the employer's profitability - they view profit as a theft from the workers. The result is that violent strikes (some protected, some not) have become standard practice here in SA. This has been tacitly condoned by COSATU, the majority trade union confederation which is in bed with the ANC government. (you might find it weird for a govt. & union to be partners but we are a very young democracy). Part of the reason that strikes here are often long and violent is because the workers routinely demand ridiculous pay rises - 15% is common, when inflation is running at 5.2%. In this strike the workers murdered 11 people, 10 in the first week of the strike. They killed 2 security guards, 2 policemen and 6 mine employees. We are talking about an armed and rabble, 3000 to 5000 strong, who killed 11 people, threatened mine management with murder, and who Lonmin have now rewarded with a bonus of R2000 ($240) and a pay increase of 22%. Lonmin have re-written wildcat strike settlement in a very bad way - this is bad for everyone in this country, believe me.
Chris King
Empangeni, South Africa

I'd be very curious to know where you get unemployment "closer to 45% than 25%". According to the SA definition of unemployment, "earnings less than... " imply that the entire informal sector is included in the 25% which is overly conservative. The entire taxi industry, for example, is not unemployed but rather in the informal sector and hence should not be part of the 25%.

I remember a UN report on SA (some years back) pointing out the flaw in the SA definition and on their analysis found unemployment closer to 10%.

But your figures would be of interest.

I must emphasize that many countries measure unemployment differently. If we in Canada applied the same calculation as the USA we would have at least one full percentage point less unemployment.

Well as in most countries, especially where there is significant unemployment, one can argue the stats. The state will always report lower, so as to 'look good', while NGOs will report what they believe to be closer the the truth. I am not a politician or an analyst, I am just a man in the street, so I gather my info from the press and radio.
The official unemployment figure of 25% is based on 'adult persons who are unemployed and are actively seeking work'. Now here is the first problem. Once someone who is poorly skilled has had dozens of refusals they give up trying and sit at home, hence they are no longer part of the statistic - they have withdrawn from the market. so unemployment is definitely higher than the official figure - let me quote from a newsletter I received today from the leader of the opposition, Helen Zille;

"We all know the statistical story of inequality in South Africa. We have an income Gini coefficient of 0.70; an unemployment rate, broadly defined, of 35%; and a staggering 51% unemployment rate of young South Africans between the ages of 15 and 24. Out of every four jobless people, three are under the age of 35".

So 45% may sound high but I have seen this figure in print and what I see around me supports this percentage. But it is actually irrelevant - even if we accept the state's artificially low figure of 25%, we still have 11 million job-seekers unemployed out of our population of 44 million.